SERVICE SECTOR / American Eco Outlines Dominion Bridge Deal
AMERICAN ECO CORPORATION
CBOE SYMBOL: EOQ
TSE SYMBOL: ECX
NASDAQ SYMBOL: ECGOF
BERLIN SYMBOL: AEOGR
FEBRUARY 26, 1998
American Eco Outlines Letter of Intent for Dominion
Bridge Acquisition
TORONTO, ONTARIO--Michael E. McGinnis, Chairman, President & CEO
of American Eco Corporation announced today that as the first step
in a proposal to acquire Dominion Bridge Corporation of Montreal,
Quebec, following completion of the purchase of a private
placement of USD$5.0 million in shares and warrants of Dominion
Bridge, he has accepted appointments to the Board of Directors and
to the Executive Committee of Dominion Bridge.
Unanimous approval of an American Eco Letter of Intent to acquire
Dominion Bridge, was given upon the recommendation of Legg Mason
Wood Walker, Incorporated. The final transaction will be subject
to ratification of the Boards of both companies, execution of a
definitive acquisition agreement, approval of the shareholders of
both companies, as well as approval of requisite regulatory
authorities and customary closing conditions.
In the proposed acquisition transaction, the shareholders of
Dominion Bridge would receive, three year, 7-1/2 percent
convertible subordinated notes ("Notes") of American Eco in the
principal amount of USD$3.00 per each common share of Dominion
Bridge. At the end of each six-month period, holders may convert
one-third of the Notes into shares of American Eco common shares
at a price of USD$15.00 per share. In the event that American
Eco's common shares trade at more than USD$16.00 per share for a
period of twenty consecutive trading days, the Notes will be
redeemable at USD$3.00 per share by American Eco. The Notes will
be registered and tradable on a nationally recognized securities
exchange.
The transaction is valued at approximately USD$135.0 million
including the third party bank debt of Dominion Bridge Corporation
of USD$37.5 million. The valuation of Dominion Bridge Corporation
is based on the significant synergies between the operating units
of both companies in North America. American Eco feels that the
combined capabilities of the firms will enable them to provide a
broad array of services to their industrial based clients
including the offshore oil and gas businesses. The significant
engineering and construction expertise of Dominion Bridge
Corporation's 63 percent owned subsidiary, McConnell Dowell,
complements American Eco's business strategy.
The Letter of Intent includes a USD$25.0 million working capital
loan to be made available to Dominion Bridge by March 23, at which
time, American Eco will also provide management services to
Dominion Bridge. Concurrently, Dominion Bridge will issue a
two-year warrant to American Eco entitling American Eco to
purchase up to 10 percent of the outstanding common shares of
Dominion Bridge at USD$3.00 per share.
The Letter of Intent also provides for the payment of a USD$3.5
million break-up fee to American Eco in the event of a third party
acquisition of Dominion Bridge. The Letter of Intent terminates if
definitive agreements providing for the contemplated transactions
are not executed by April 6, 1998.
Michael McGinnis, Chairman, President & CEO of American Eco,
stated, "As a Canadian Company, American Eco plans to support the
employees and customers of Dominion Bridge through this transition
period and then to expand it as world class company, by
collaborating and sharing fabrication work with our American Eco
facilities in Halifax, Edmonton and Vancouver. In addition, the
ability to expand services not only throughout North America but
on a world wide basis, including the very strong Pacific Rim
presence of McConnell Dowell provides a major profit opportunity
for all divisions".
After execution of a definitive acquisition agreement, American
Eco and Dominion Bridge will file a registration statement with
the Securities and Exchange Commission containing a joint proxy
statement and prospectus that will be mailed to the companies'
stockholders. This announcement does not constitute an offering
of American Eco notes, which will be made only be means of a
prospectus filed with the Securities and Exchange Commission.
This news release contains forward-looking statements as defined
by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance and
underlying assumptions and other statements that are other than
statements of historical facts. These statements that are subject
to uncertainties and risks including, but not limited to, ability
to raise capital, economic conditions, continuation of existing
contracts and increase in backlog, impact of competition, pricing,
capacity and supply constraints or difficulties, government
regulation and other risks, including similar risks involving
Dominion Bridge. All such forward-looking statements whether
written or oral, and whether made by or on behalf of the company
are expressly qualified by these cautionary statements and any
other cautionary statements which may accompany the
forward-looking statements. In addition, the Company disclaims
any obligation to update any forward-looking statements to reflect
events or circumstances after the date hereof.
Dominion Bridge was established in 1879. The Company is active in
the international engineering and infrastructure markets. It
manages projects and operates facilities in North and South
America, Europe and the Asia Pacific. Dominion Bridge
Corporation's subsidiaries are Dominion Bridge, Inc., Steen
Becker, Inc. and Davie Industries. Its Australian subsidiary,
McConnell Dowell Corporation, is a major Asia Pacific engineering
firm.
American Eco is a leading North American provider of single-source
construction, management, maintenance, specialty fabrication,
engineering and environmental remediation services in the
refining, petrochemical, utility, forest products and offshore
manufacturing industries. |
